Balanced Budget Amendment

A balanced budget amendment is a constitutional rule requiring that a state cannot spend more than its income. It requires a balance between the projected receipts and expenditures of the government.

Balanced-budget provisions have been added to the constitutions of most U.S. states, the Basic Law of Germany, the Hong Kong Basic Law, Spain, Italy and the Swiss Constitution. It is often proposed that a balanced-budget rule be added to the national United States Constitution. Most balanced-budget provisions make an exception for times of war, national emergency, or recession, or allow the legislature to suspend the rule by a supermajority vote.

In November 2011 the Austrian coalition government agreed to amend its constitution and introduce a German style Schuldenbremse ("debt brake"). This will force the government to reduce its debt level to 60% of gross domestic product (GDP) by 2020.

Article 34 of the Constitution was amended in 2008 to include the objective of balancing the public sector accounts. In 2012 France passed a new law (2012-1403), creating the independent High Council of Public Finances, giving it the responsibility to report on the sustainability and deviation from planned targets of public spending.

In 2009 Germany's constitution was amended to introduce the Schuldenbremse ("debt brake"), a balanced budget provision. This will apply to both the federal government and the Länder (German states). From 2016 onwards the federal government will be forbidden to run a structural deficit of more than 0.35% of GDP. From 2020, the states will not be permitted to run any structural deficit at all. The Basic Law permits an exception to be made for emergencies such as a natural disaster or severe economic crisis.

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